1. Field of the Invention
This invention relates to networking, and more particularly to architectures for Internet Service Providers (ISPs).
2. Description of the Related Art
In the early days of the Internet, Internet Service Providers (ISPs) served relatively few clients and offered a typically narrow scope of services. As a result, the first generation Internet services infrastructures combined the few required applications onto a single server or a small number of servers. This monolithic architecture design inherently limited the number of clients that could be served and the variety of services that could be offered. As demand for Internet applications expanded, ISPs could not react quickly enough to scale their systems capacity or offer new services.
A new generation of ISPs has emerged that combine the increased scalability of multi-threaded applications with dedicated hardware for each independent service. This “stovepipe” infrastructure design enabled ISPs to scale their service offerings to support hundreds of thousands, even millions of customers. While this type of design addressed the scalability issues of first generation designs, adding new services required adding new stovepipes, (that is, new dedicated hardware) for each additional service. From a business perspective, the stovepipe Internet services infrastructure was costly to implement, difficult to manage, and not flexible enough to allow rapid changes or additions to service offerings.
In a relatively short time, the Internet has become a major marketplace. Service providers of every size and composition are active in the market, and both new and established companies are looking for ways to increase subscribers, services, and, ultimately, revenues. Even though the ISP market has matured, significant opportunities still exist, especially for international ISPs, to capitalize on niche and underdeveloped marketplaces and to add new residential and business subscribers. As bandwidth becomes available at an increasingly affordable cost, ISPs look for new value-added services and ways to attract new subscribers. The ISPs with established infrastructures are uniquely positioned to leverage their expertise and scale. In addition, ISPs are seeking new channels for their services and opportunities to reach new subscribers.
FIG. 1 illustrates segmentation of the Internet Service Provider market. Service providers may be classified into three classes: network service providers (NSPs), application service providers (ASPs), and Internet service providers (ISPs). Each of these types of service providers is developing their specific market while making inroads into complementary areas. Companies that provide services in all three areas are known as Full Service Providers.
NSPs are companies that offer high-speed backbone Internet access. These companies are typically large telecommunication providers and network equipment providers, and may own and operate networked, wireless, and wireline telephones, cable, and satellite. For example, some NSPs in the market today are AT&TSM, BBN®, Bell South, Level3, Qwest®, and UUNet®. ASPs are companies that offer online application hosting to businesses. ASPs provide businesses such as ISPs with applications and infrastructure for running applications over the Internet. These applications are usually provided via a wide area network (WAN) from a centralized data center. Businesses operating over the Internet most often outsource Information Technology (IT) functions to ASPs, to save time and money. For example, some ASPs in the market today are PeopleSoft®, TIBCO™, VerticalNet™, ATG®, and Oracle. ISPs provide Internet access and services to business and residential subscribers. For example, some ISPs in the market today are America OnlineSM (AOLSM) AT&T Broadband InternetSM, Mindspring™, and Earthlink™.
In response to decreasing market share and new opportunities, many traditional telecommunication companies have shifted business strategies and become NSPs, then integrated ASP and ISP characteristics. By having all classes under one roof, these companies provide a one-stop portal for both business and residential subscribers. Smaller ISPs that offer high-speed Internet access via digital subscriber lines (DSL) or cable modems are more likely to grow in the competitive market. Growth patterns and customer satisfaction surveys indicate both national and regional ISPs that want to attract new customers have to offer high-speed service. In response to customer demand, local cable and regional telephone providers are gearing up to roll out more DSL and cable modem services.
Change is constant on the Internet. High-speed access appears to be a trend for the next several years. Predictions are that broadband will grow quickly, and that DSL and fixed wireless access will gain on cable. Increasing consumer demand and technical innovations with self-provisioning are cited as the major cause for this growth. Fixed wireless and two-way satellite technologies are being deployed as alternatives to DSL and cable modem. These technologies substitute where cable modem and DSL services are unavailable. In some cases, these technologies directly compete with DSL and cable modem. In general, cable subscribers are more satisfied with their broadband service than DSL subscribers. DSL access remains popular among small businesses.
Many businesses are looking to enter or expand their business in the ISP market. Entering the ISP market may present daunting infrastructure challenges. The entrance to the ISP market typically involves a significant commitment and a substantial cost associated with services. Infrastructure challenges include managing a large number of subscribers, subscriber and service provisioning, and operation and management.
For many companies, what it takes to be an ISP is far removed from their core business. A key factor for success in this market is delivering reliable and consistent services in a fast-moving market. Small to medium-sized businesses that approach this market may lack the infrastructure and technical expertise to deliver services in an economical way. Typically, solutions require a large amount of time and effort, as well as a significant initial investment and on-going support costs. These costs may include, but are not limited to, recruiting and retaining qualified technical and management staff. These businesses may face a market where there may be a shortage of skilled IT professionals, making it difficult to be self-sufficient in managing a variety of applications and platforms in-house. Significant hardware, software, and integration costs may be required, often amounting to hundreds of thousands of dollars. On an annual basis, operations and management costs can be as much as the initial entry costs. For many businesses, this investment can be a considerable financial strain. Planning for applications in-house may be very difficult without an army of qualified professionals. The need to anticipate growth rates and forecasts in volatile markets may lead to inaccurate estimates and costly mistakes.
Many ISPs are marketing add-on services to current subscribers rather than spending large investments to attract new subscribers, because it tends to be more cost-effective. Value-added services may produce higher profit margins for services sold to current subscribers. Most revenues earned by ISPs from residential subscribers are still a product of dialup Internet access. However, market indicators show that ISPs may find it difficult to increase revenue from dial-up residential subscribers unless these subscribers either adopt high-speed technologies or sign up for value-added services.
In a market that includes multi-national conglomerates, it may be preferable for independent ISPs to rely on the same business strategies that have helped other small businesses succeed when facing larger rivals: for example, personal service, quick responses to customer service inquiries, and the idea that the customer always comes first. Local and regional ISPs may also utilize their geographic service area to their advantages by offering content or services specifically designed to appeal to local audiences.
An important consideration for any company entering the ISP market may be whether it is necessary to build a new ISP from the ground up to serve its subscribers. There are a variety of ways to provide ISP services without committing large capital expenses and ongoing operating resources necessary for a new ISP. In particular, some applications have become a commodity, and it may be possible to outsource to ASPs. Each of these relationships may have inherent advantages and disadvantages. However, many if not all of them may off-load the expertise and much of the capital expense needed to build and operate an ISP. If an ISP does not have in place the qualified staff and expertise, then off-loading to ASPs is generally the best option, because these companies typically have core competency in the service provider market.
For mission-critical applications that drive a business, ISPs may rely on an ASP's applications, such as accounting and provisioning, for essential and critical business processes. The outsourcing model may offer, for example, service level agreement (SLA) and around-the-clock dedicated operation and management staff. The outsourcing solution may provide a level of operation and management excellence beyond that economically viable for small businesses, at a very attractive rate. Specific applications, such as a billing system, auto-registration, and customer self care, may be outsourced, while others may be retained in-house. Small to medium sized businesses may leverage professional expertise from outsourcing, rather than facing the high-risk and high-cost approach of the past. In fact, with variable costing models, minimal commitment terms, and typically minimal integration work, tactical decisions on short-term outsourcing can be used in an economical way, allowing businesses to focus on their core business and leave provisioning, operation, and management to qualified professionals.
The trends driving outsourcing are clear: leveraged expertise, channel strategies, and financial challenges faced by small and medium-sized businesses. There is a wide variety of outsourced solutions which are available today from most ASPs, and the variety may grow depending upon the pace of broadband access in the residential market. Those that do not adapt to this model may find the cost pressure to compete under the old model unbearable.
For small and regional ISPs, performing everything in-house typically draws IT resources from critical marketing and sales initiatives. Without a focus on their core business, these small and medium-sized businesses may fall out of step with their market, relying increasingly on unprofitable and limited service offerings. The purchase of commercial off-the-shelf (COTS) products for these small ISPs may prove to be a difficult business case to make. Low-end applications may provide some required features, but may lack the robust end-to-end functionality, the flexibility to add new value-added services, and the scalability to keep pace with the exponential growth in subscribers and new services.
The full-feature, carrier-grade billing systems, necessary hardware, technical support, and deployment expertise required may be impractical for small and regional ISPs. The high-cost of meeting these requirements typically cannot be justified within the business case. This may leave businesses settling for short-term tactical homegrown or low-end solutions, which obviously do not solve the problem of flexibility, reliability, and scalability.
Requirements that small and regional ISPs preferably look for in an outsourced solution may include one or more of, but are not limited to:                Resource leverage—The decision to outsource provisioning is due to the fact that small ISPs can get a better solution than that available via purchasing.        Variable costs—Small ISPs are looking for low up-front investment.        Flexible terms—The solution must be low risk, without excessively long-term agreements.        Service level agreements—Much of the value that a large service provider offers relates to the reliability and availability of a carrier-grade solution, including but not limited to, provisioning, online billing and payment, subscriber self-care, auto-registration, guaranteed availability, and disaster recovery.        Integration—Small ISPs are looking for a seamless offer. Everything from online billing and auto-registration interfaces to subscriber self-care applications must be integrated with directory services.        
These and potentially other requirements may create some significant infrastructure demands. While it may be relatively easy to implement homegrown systems, this approach may be unprofitable and difficult to differentiate. The support systems that facilitate these basic offerings are typically unable to scale to manage the phenomenal growth of the Internet, and they lack capabilities to generate revenue from value-added service.
An alternative approach for companies entering the ISP market is to enter a co-location or managed operation agreement with an existing ISP or hosting service provider. With this approach, a company commits capital resources necessary to build its own computing environment. This investment includes, and is not limited to, hardware, software, data center footprint, and Internet connectivity from a NSP or a telecommunication service provider. The advantage of this alternative is that it gives a company as much control over the services as it wants, while still limiting the capital and operation expenses of building a new ISP from the ground up. In particular, this approach eliminates the need for a company to maintain its own in-house technical, operation, and management staffing. In addition, it eliminates the need to build and maintain an expensive data center environment. At the same time, it allows a company to determine exactly what services to offer and what software to use to support services. Perhaps, most importantly, this approach allows a company flexibility to customize its product offerings and pricing, while reducing the up-front capital investment to start an ISP. Although this approach is a far less expensive option for entering the ISP market than building and operating an ISP infrastructure from the ground up, there is still significant capital investment needed. Some hardware and software investment is necessary to support this model.
For enterprises and service providers alike, knowing how to leverage the Internet for more than mere Web advertising and e-mail access may be vital to remaining competitive in today's increasingly Net-driven markets. Successful service providers and commercial enterprises may differentiate themselves by the way they use Internet technology to rapidly create and deploy new services and implement new business models. To leverage the potential of the Internet, service providers and enterprises may need to transform their existing IT infrastructures to support new applications that reach beyond the corporate intranet. These new applications may open new markets and deliver competitive advantages through a unique approach to core business processes such as customer care, supply chain management, sales/distribution, and decision support. Likewise, service providers may need to respond to concurrent market pressures such as an increasingly crowded marketplace, growth in user volumes, and demands for new services such as vertical portals, business outsourcing, secure remote access and e-commerce. Without a versatile, reliable foundation, existing service provider infrastructures may be incapable of scaling to meet increased capacities or delivering the new services the market demands.
Regardless of market niche, all types of providers must position themselves for growth and agility to handle increasing numbers of subscribers, additional services, and workloads that are more challenging. System architectures that meet these demands are critical to success. Therefore, it may be desirable to achieve a solution to the above challenges by implementing a well-defined, flexible IT infrastructure that fully integrates Internet technologies with core business systems.